Paganini: Industry Back on Track by 2014

By Andrew Parker, Editor-in-Chief

January is the month that features our Rotorcraft Outlook Panel, where top CEOs in the industry provide insights into the coming year and beyond. I recently had a chance to interview American Eurocopter President & CEO Marc Paganini, with the full Q&A scheduled to appear in the February issue of Rotor & Wing.

Q: How was business for the company in 2012 and what does the picture look like for 2013 and beyond?

Paganini: This year we’re going to produce about 100 aircraft in Mississippi. Half of them are for the UH-72A Lakota program, the light utility helicopter (LUH) for the U.S. Army, while the remaining [AS350] AStar B3s and B2s are for the U.S. public services sector—representing a small increase over last year. The market has been a little better on the commercial side in the U.S. in 2012 compared to 2011. The prediction is about the same overall.

Q: What is the outlook for the commercial market?

Paganini: We expect the market to continue to grow on the commercial side. It started to rebound at the end of 2011 and this continued through 2012. We expect to get back on track by 2014 to the levels pre-financial crisis. Strong markets like EMS are driving the recovery. EMS is a market that’s usually slow to grow, but there’s a lot of fleet renewal [possibilities].

Replacing old BK-117s, old BO-105s, old Dauphins—this is driven by replacement and a little growth, but not strong growth.

The oil and gas market is very promising in the Gulf of Mexico. This year the activity has grown significantly, and this is a market that will require large aircraft.

Police and law enforcement is slowly coming back. It’s been one of the most important markets after the economic crisis because of the financial situations of the municipalities. Now the overall situation is improving a little bit, and we’re starting to see some good opportunities in law enforcement, mainly for light-single engine aircraft but also a few for twin-engine helicopters.

For corporate/VIP, the year has not been too bad. It follows the economy and the profit of the companies, so hopefully the economy will continue to grow. It’s not obvious yet but it’s coming back slowly and we expect it to be active during 2013.

Q: How much does American Eurocopter plan to invest in R&D, outside of the parent company Eurocopter?

Paganini: At American Eurocopter our R&D is mainly going to the development of the prototype for [the U.S. Army] Armed Aerial Scout (AAS) program [with EADS North America]. All the development of this prototype and this partnership with Lockheed Martin was handled here in Grand Prairie.

We have also developed a new version of the LUH [UH-72A light utility helicopter] in the Security & Support (S&S) Battalion configuration for the Army National Guard. We are also doing STCs—that’s what we do here in the U.S.

More and more, we are building up the capability to not only develop STCs but to do some design work, major modifications on aircraft, or for the first time we were given responsibility to do a prototype for Eurocopter.

The main R&D work in terms of development of new technology and programs, demonstrators, larger aircraft, is of course done in Europe, both in Germany and France. Today we remain in a plan that started in 2010 stretching out to 2014 where we are investing $1.7 billion to do what I just said—we have launched the EC130 T2, the EC145 T2, and the EC175.

We are working on the X4 successor to the Dauphin, and we have this technology demonstrator the X 3(X-cubed), testing composite, new blades. We’re also working on a diesel engine-powered helicopter.

Q: What was the feedback like from the X 3 U.S. summer tour?

Paganini: Of course the operators like the speed, but what they also liked is that the speed was not a tradeoff against cost, because we say we’re going to get 50 percent more speed but with an increase in life cycle costs of 20 to 25 percent. This is important because speed must be affordable, and this is why we decided to go to a speed in the range of 230 knots. We do not believe that going to higher speeds is what the market needs or is willing to pay for.

The second thing that was very important is that it’s still a helicopter, and then if you want to go fast, you go fast. You don’t lose any of the attributes of the helicopter, such as hovering, which is needed in many of the helicopter markets. Otherwise you go to fixed-wing. The combination of speed and classic capabilities of a helicopter were very well received, and the military pilots were impressed as well.

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